Preclinical models demonstrate that nearly all anesthetics cause widespread neuroapoptosis in the developing brains of infant rodents and non-human primates. Anesthesia-induced developmental apoptosis is succeeded by prolonged neuropathology in the surviving neurons and lasting cognitive impairments, suggesting that anesthetics interfere with the normal developmental trajectory of the brain. However, little is known about effects of anesthetics on stereotyped axonal pruning, an important developmental algorithm that sculpts neural circuits for proper function. Here, we proposed that neonatal ketamine exposure may interfere with stereotyped axonal pruning of the infrapyramidal bundle (IPB) of the hippocampal mossy fiber system and that impaired pruning may be associated with alterations in the synaptic transmission of CA3 neurons. To test this hypothesis, we injected postnatal day 7 (PND7) mouse pups with ketamine or vehicle over 6 h and then studied them at different developmental stages corresponding to IPB pruning (PND20–40). Immunohistochemistry with synaptoporin (a marker of mossy fibers) revealed that in juvenile mice treated with ketamine at PND7, but not in vehicle-treated controls, positive IPB fibers extended farther into the stratum pyramidale of CA3 region. Furthermore, immunofluorescent double labeling for synaptoporin and PSD-95 strongly suggested that the unpruned IPB caused by neonatal ketamine exposure makes functional synapses. Importantly, patch-clamp electrophysiology for miniature excitatory postsynaptic currents (mEPSCs) in acute brain slices ex vivo revealed increased frequency and amplitudes of mEPSCs in hippocampal CA3 neurons in ketamine-treated groups when compared to vehicle controls. We conclude that neonatal ketamine exposure interferes with normal neural circuit development and that this interference leads to lasting increase in excitatory synaptic transmission in hippocampus.